Maxim Group LLC
The findings stated that the firm published its report for the fourth quarter of 2019, which did not describe, as required, the rebates it received from certain equities execution venues to which the firm routed customer orders. In addition, with respect to each equities and options execution venue to which it routed customer orders, the firm failed to provide the amount per share or per order received.
Furthermore, for its quarterly reports published for the first three quarters of 2020, the firm did not disclose that it received rebates from certain equities execution venues to which the firm routed customer orders. For the firm’s quarterly reports for all four quarters of 2020 and the first quarter of 2021, it did not include the more detailed disclosures required by Rule 606(a) of Regulation NMS with respect to each equities and options execution venue to which it routed customer orders, including the net aggregate amount of any payment for order flow received, payment from any profit-sharing relationship received, transaction fees paid, and transaction rebates received (including a total amount and on a per share basis) for certain order types.
In addition, in the firm’s first quarter 2021 report, it inaccurately listed several entities as execution venues that did not serve as execution venues for the firm during that period.
Although FINRA alerted the firm to the deficiencies in its Rule 606(a) reports for the fourth quarter of 2019 and the first quarter of 2020 during the firm’s 2020 cycle examination, the firm did not timely remediate the deficiencies.
The findings also stated that the firm did not reasonably supervise its Rule 606(a) quarterly reports. The firm’s written procedures did not specify who would review the firm’s published quarterly reports for compliance with the disclosures required by Rule 606(a), or provide guidance as to how such a review would be conducted, when it would occur, and how it would be documented. In practice, the firm did not analyze its Rule 606(a) reports to determine whether the information disclosed comported with the requirements in the rule.
The firm has since completed certain enhancements to its supervisory system for reviewing Rule 606 reports. The remediation that the firm ultimately made included supplementing the firm’s Rule 606 policies and procedures, republishing certain Rule 606 reports with updated information, and requiring certain enhancements from the firm’s third-party Rule 606 reporting vendor.
